Tax-free and Duty-free shopping are terms commonly related to tourists. However, they are not to be confused with one another. Although you might have heard them being used interchangeably, tax-free shopping is different from duty-free shopping. Let’s dive into understanding the differences between the two.

Tax-free shopping

Tax-free shopping allows tourists to receive a refund of the Value-added tax or VAT paid for goods purchased when shopping in stores and malls in a city. In some countries, the term Goods and Services Tax or GST is used instead. Tourists claim their refunds before returning home at the point of departure.

Duty-free shopping

Duty-free shopping allows tourists to purchase goods without having to pay taxes. Duty-free shops are found in the transit areas of airports but can also be found at other international zones such as cruise ships. It also applies to goods that tourists cannot claim tax on such as alcohol and tobacco.

Most tourists usually visit duty-free shops at the airport to spend any remaining money they have before departure. Perfumes, gourmet chocolates, and luxury accessories are among the products sold at these duty-free shops. Some of the most popular airports for duty-free shopping are the Dubai International Airport, known for being a prominent place to buy gold and perfumes, and the Paris Charles De Gaulle Airport, which boasts some of the country’s renowned designer brands.

Comparing the differences

The main difference between these two would be the payment of tax when purchasing a good. Tax-free shopping requires you to pay the full price of the item including VAT or GST at the point of sale of shops cityside then claim your tax refund at the point of departure (e.g. an airport). For duty-free, you would not have to go through the process of claiming your tax refunds as the VAT or GST is not included at all in the price of the items upon purchase and is generally done airside after crossing immigration.

Crowd of tourists walking on a busy street.
Krakow, Old Town, Poland.

Shop tax-free with utu!

When you travel, you can enjoy the benefits of both tax-free and duty-free shopping. Shop tax-free in the city during your trip, then do some last-minute shopping duty-free before you leave. utu recognises that tax refunds should be a reward for shoppers and focuses on the needs of tourists who should receive the best refund for tax-free shopping.

utu’s upcoming product incorporates the innovative use of payments and rewards technology to bring more value to your travel retail experience.

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